While it still comes as a surprise to some, and as big as it is, e-commerce is not the story. Online influencing offline buying is a much bigger and more important phenomenon. Roughly 95% of all products are bought in stores (according to the US government). Many analysts in the late 1990s foretold the death of traditional retail at the hands of e-commerce. However something more complicated has happened.

Consumers spend a good deal of time looking online at reviews and doing price research before buying in stores. Numerous studies over the past several years have found that 80% to more than 90% of internet users engage in this behavior. Sameer Samat, Director of Product Management at Google, told me that Google observed consumers trying to make the connection between online product search and offline inventory, by sometimes including geographic modifiers with product queries or using store names to identify places where they might be able to buy the desired item.

About five years ago Google made an aborted effort to bring local inventory online through a partnership with ShopLocal and a company called StepUp Commerce (later acquired by Intuit). Google discontinued the effort after a relatively short period. I’m guessing the company decided there wasn’t enough scale at the time.

Today Google is significantly broadening the exposure of local product data online and in mobile. The company is bringing in-store product inventory from a broad range of major retail partners to Google Product Search and to Google’s shopping app, Google Shopper, for Android.

Consumers looking online in Google Product Search or on the re-launched Google Shopper app will now be able to determine, across a broad array of products, whether the searched-for item is available at a particular offline store. Consumers will also be able to filter or restrict product searches to show only results from physical stores that carry the item in question. Google will also highlight stores that have a “wide selection” of the desired item. And local inventory results will appear in Google.com SERPs.

There’s no formal word on whether local inventory data will be coming to Google Maps, which is where it appeared five years ago. But I suspect that Google Maps will ultimately get the data. Here’s some additional speculation: Google will combine this product feed data with local extensions and product listing ads to make dynamic local product ads available in AdWords. I asked Google about this possibility and the company declined to comment.

Beyond local product inventory data, Google is trying to bring some of the “in-store experience” to online by including more discovery and browse functionality in Google Product Search. Part of the way it intends to do this is by highlighting popular products and also creating a new “aisle” experience showcasing similar products in a category grouped together visually. These new features are intended to complement the more traditional search experience on Google and serve the needs those not entirely sure what they’re looking for — higher up “in the funnel.”

As mentioned, Google isn’t the first or the only company trying to bring local product inventory to online and mobile consumers. There are a number of other companies that have been working on the problem for a few years and some that have just launched. Here’s a non-exhaustive list of the principal companies (other than Google) working on helping online consumers find products in local stores or distributors:

Clarinova

Goodzer

Krillion

Milo

NearbyNow

Retailigence

Shopatron

ShopLocal

Each of these companies has a different approach to the local product inventory problem. It’s particularly vexing because large retailers themselves often don’t have accurate databases of what products are currently in stock. And small retailers often don’t have the systems to support data feeds. Google says it wants to include as many products as it can from large and small retailers.

Google gets the data through direct retailer feeds or through use of a software “plug-in” that works with their inventory software (from vendors JDA, Epicor, Oracle) and facilitates delivery of the data to Google.

Mobile is an area where this will be of equal or perhaps even greater value to consumers. Recall that last week I posted about an amazing statistic from Microsoft: 53 Percent Of Mobile Searches Have Local Intent. Mobile users are ready to buy and retailers are going to be eager to get them into stores to do just that. Much of the discussion about driving mobile users into stores to date has been about coupons or some equivalent loyalty mechanism. Product inventory information is an important new tool for retailers as well.

The new version of Google Shopper allows users can search by text, voice or camera to get reviews and pricing information about products. They’ll also now be able to locate real-time inventory and get directions to those stores, through integration with Google Maps and Navigation functionality on Android handsets.

There’s a good deal more to say about all this. However I’ll conclude by speculating that this move will likely put pressure on a range of consumer shopping sites and destinations to find comparable data. Some already have local product data through deals with Krillion or Milo or NearbyNow. And newer companies Retailigence and Goodzer are also eager to syndicate the data too. Indeed, many of the companies mentioned above should start hearing their phones ring — if that hasn’t already happened.

This move is yet another effort on the part of Google to address the critical local opportunity and connect the dots between online research and offline buying.

About The Author

Greg Sterling is a Contributing Editor at Search Engine Land. He writes a personal blog, Screenwerk, about connecting the dots between digital media and real-world consumer behavior. He is also VP of Strategy and Insights for the Local Search Association. Follow him on Twitter or find him at Google+.